investing in stock markets

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  • 1.Investing In Stock Markets

2. Why Invest in Stock Markets

  • Historically, on a long term horizon equities have given higher return than other asset classes

3. Source: www.rbi.org.in 4. Basics of the Stock Market

  • Stocks : It is a term used to symbolize an investors ownership of a company.
  • Stock Market :It is the place where buying & selling of these shares happen. (also known as stock Exchanges)
          • (Issues in Market Design )
  • Primary:security markets where new issues of securities are initially sold.
  • Secondary:A market where securities are resold. E.g. the NSE.

5. Basics ofthe StockMarket

  • Face Value
  • Market Value
  • Dividend
  • Bonus Shares
  • Market Capitalization :
          • No.of outstanding sharesXCurrent Market Price

6.

  • Small Cap : Market Capitalization less than 75 crores
          • (High Risk high returns )
  • Mid Cap : Market Capitalization between 75 to 7500 crores
          • (Medium Risk Medium Returns)
  • Large Cap : Market Capitalization more than 7500 Crores
          • (Low Risk Low returns )

Classification of Shares 7. The Trading Process

  • The elements of the trading process can be
  • divided into 4 components:
  • Information
  • Order routing
  • Execution
  • Clearing

8. Some Issues in Stock market design

  • The way the market is designed will affect
  • what type of traders participate, the overall
  • trading process and the behaviour of prices.
  • 2 factors to consider:
  • Transparency
  • Automation

9. Information

  • Bid Price
  • Ask Price
  • Volume
  • Percentage Change
  • Day High / Day Low

10. Types of Orders

  • Market Orders :
  • Most common type of order placed by an investor
  • on the NSE. It is an order to buy or sell at the best price currently
  • available.
  • Limit Orders :
  • This is an order to buy/sell at a maximum/minimum
  • price. These orders control the price paid or received, but investor
  • has no way of knowing when the order will be filled.

11.

  • Delivery orders :Trades for which the investor takes or gives delivery of shares depending upon the trade he has entered into.
  • IntraDay Orders : Trades which have to be squared off on the very same day

Types of Orders 12. Market Participants

  • Regulators
  • Exchanges
  • Brokers
  • Depository Participants
  • Investors / Clients

13. Online Trading

  • Aims at converting the Open Outcry system of trading to a screen based trading system.

14. Now what is Online Trading

  • Buying& Selling of stocks, options, bonds, and other financial instruments using online brokers web sites and systems
  • Management guru Tom Peters, "distance is dead".

15. How is it Done

  • Online trading can be done through
      • A Trading Platform ( Software )
      • Brokers Website

16. Why trade online

  • In a market where every second counts, you have to constantly be up to speed.

17. OBJECTIVES OF ON LINE TRADING

  • Leads to transparent deals in the market.
  • Improves liquidity in the market
  • Increases the market depth through quote-continuity
  • Instantaneous dissemination of information through channels.
  • Structured MIS reports for analysis.

18. Service Providers in India

  • Brokerage Houses
      • Sharekhan
      • 5paisa.com
      • Indiabulls
      • Angel Broking
  • Financial institutions
      • ICICIDirect
      • HDFC Securities
      • IDBI Capital
      • Kotak Securities

19. Getting Started 20. Starting up

  • Evaluate the Brokers
  • Select the best broker
  • Open a Demat A/c&Trading A/c with the broker.
  • Open a savings Bank A/c which is linked with the Broker

21. DEMAT ACCOUNT

  • Dematerialized account.
  • Approach the DP .
  • Must for trading and investing .

22. Scenario 1 3 Entities for D / T / S ( T + 2 ) Shares Come to your demat A/c 9 thJanShares come in your trading A/c 5 thJanMoney comes to your account 3 rdJan Give cheque to the broker 1 stJan Particulars Date 23. Scenario 2 2 Entities D/T S(nl) ( T + 2 ) Shares come in your trading A/c (same day transferred to demat A/c) 5 thJanMoney comes to your account 3 rdJan Give cheque to the broker 1 stJan Particulars Date 24. Scenario 3 2 Entities D/T S (l) Shares come in your trading A/c (same day transferred to demat A/c) You may sell the shares off on the same day 3 rdJan Give an online instruction money comes in your trading A/c, You purchase the share that day itself. 1 stJan Particulars Date 25. Investor HDFC Bank (S avings a/c ) SHAREKHAN ( Demat a/c ) PutsBUY order onwww.sharekhan.com SHAREKHAN Savings accountBalance checked&blocked ContractnoteissentthroughE-mail Buyorder executed&Savingsa/cdebited Shares creditedonT+2 day SHAREKHAN (Tradinga/c ) 26. YOUR SAVINGS A/C TRADING A/C WITH BROKER YOUR DP A/C MONEY COMES IN PURCHASE SHARES SHARES TRANSFERRED INTO DEMAT A/C 27. Documents Required

  • Photo ID Proof- Election Card , Driving Licence, PAN
  • Residence Proof Ration Card, MTNL bill, Electricity bill
  • Bank A/c proof (Statement)
  • PAN Card - MUST

28. Comparative analysis of broking firms 29. Comparative Analysis of different Broking Firms

  • Following Broking Firms are taken for the purpose of comparative analysis :-
  • Kotak Securities
  • Sharekhan
  • IDBI paisa builder.
  • India Bulls
  • HDFC Securities

30. Parameters Used 100 Total 20 Customer service 20 Range of services offered (BSE, NSE, F&O, Commodities, PMS Etc.) 30 Brokerage 30 Portal Weightage given Parameters Used 31. 1st Parameter :- Quality of Portal USER FRIENDLINESS 24 80 2 nd HDFC Securities* 6 20 5 th India Bulls 30 100 1 st IDBI paisa builder.24 80 2 nd Sharekhan 12 40 4 th Kotak Securities Total Weighted score (Scores * 30%) Scores RankingName of the Firm 32. 2ndParameter :- Brokerage Charged 24 80 2 rd HDFC Securities 30 100 1 st India Bulls 24 80 2 nd IDBI paisa builder.24 80 2 nd Sharekhan18 60 3 rd Kotak Securities Total Weighted score (Scores * 30%) Scores RankingName of the Firm 33. 3rdParameter :- Range of Services Offered 20 100 1st HDFC Securities 08 40 4 th India Bulls 12 60 3 rd IDBI paisa builder.16 80 2 nd Sharekhan 12 60 3 rd Kotak Securities Total Weighted score (Scores * 20%) Scores RankingName of the Firm 34. 4thParameter :- Customer Services 16 80 1 st HDFC Securities 12 60 3 rd India Bulls 08 40 4 th IDBI paisa builder.20 100 1 st Sharekhan 16 80 2 nd Kotak Securities Total Weighted score (Scores * 20%) Scores RankingName of the Firm 35. COMPARISON OF TOTAL WEIGHTED SCORE OF ALL THE FIRMS 36. 1 st 84 16 20 24 24 HDFC Securities 4 th 56 12 08 30 6 India Bulls 2 nd 74 08 12 24 30 IDBI paisa builder.1 st 84 2016 24 24 Sharekhan3 rd 58 16 12 18 12 Kotak Securities Relative Ranking Total Weighted score Weighted Score on Customer Services Weighted Score on Range of Services Weighted Score on Brokerage Weighted Score on Portal Name of the firm 37. What is a Depository?

  • ..a facility for holding securities which enables securities transactions to be processed by book entry.
  • Physical securities may be immobilised by the depository or securities may be dematerialised (so that they exist only as electronic records).

38. Depositories in India

  • NSDL
  • Industrial Development Bank of India
  • Unit Trust of India
  • The National Stock Exchange of India
  • State Bank of India
  • Global Trust Bank Limited
  • Citibank NA
  • Standard Chartered Bank
  • HDFC Bank Limited
  • The Hong Kong and Shanghai Banking Corporation Limited
  • Deutsche Bank
  • Dena Bank
  • Canara Bank
  • CDSL